Category Archives: Taxes

that redemption once effected [paying off the national debt], the revenue thereby liberated may, by a just repartition of it among the states, & a corresponding amendment of the constitution, be applied, in time of peace, to rivers, canals, roads, arts, manufactures, education, & other great objects within each state. in time of war, if injustice by ourselves or others must sometimes produce war, increased as the same revenue will be by increased population & consumption, & aided by other resources reserved for that crisis, it may meet within the year all the expences of the year, without encroaching on the rights of future generations by burthening them with the debts of the past. War will then be but a suspension of useful works; & a return to a state of peace a return to the progress of improvement.Second Inaugural Address, March 4, 1805

Patrick Lee’s ExplanationWise leaders know being debt free opens lots of doors.
Jefferson anticipated a budget surplus and suggested this for the excess:
1. Some would be returned to the states on fair basis.
2. With a Constitutional Amendment, some would be spent on infrastructure, arts, education and commerce in peacetime.
3. In war time, increased consumption by an increasing population, along with other sources of income, would provide the revenue necessary for fighting.
4. War would be only “a suspension of useful works,” and peace would bring their return.
4. The present generation must not cripple the ones to come by passing present debt into the future.

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The remaining revenue, on the consumption of foreign articles, is paid chiefly by those who can afford to add foreign luxuries to domestic comforts … it may be the pleasure and the pride of an American to ask What farmer, what mechanic, what labourer ever sees a tax-gatherer of the US.? these contributions enable us to support the current expences of the government, to fulfill contracts with foreign nations, to extinguish the native right of soil within our limits, to extend those limits, & to apply such a surplus to our public debts, as places at a short day their final redemption …Second Inaugural Address, March 4, 1805

Patrick Lee’s ExplanationFrugal leaders enrich their constituents.
An earlier post detailed how Jefferson was shrinking the overgrown government and eliminating the internal taxes required to support it. There was still one important source of tax revenue, though, customs duties on imported goods. Who paid those taxes? Only those prosperous enough to purchase non-necessities from Europe. The vast majority of citizens were tax-free.

The customs tax on the imported goods of the well-to-do provided enough revenue to pay the nation’s bills, domestic and foreign. Thus, Jefferson could now boast, along with his fellow citizens, “What farmer, what mechanic, what labourer ever sees a tax-gatherer of the US.?”

Should those customs duties produce a surplus, Jefferson had a plan for the excess, to reduce the public debt and hasten the day when America would be debt free.

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At home, fellow-citizens … the suppression of unnecessary offices, of useless establishments and expences, enabled us to discontinue our internal taxes. these covering our land with officers, & opening our doors to their intrusions, had already begun that process of domiciliary vexation, which, once entered, is scarcely to be restrained from reaching successively every article of property & produce.Second Inaugural Address, March 4, 1805

Patrick Lee’s ExplanationEmpowering leaders free their constituents from harrassment.
After foreign affairs, Jefferson turned his attention to taxes, a key issue on the domestic front. He thought the national government had expanded far beyond its authority. It took a lot of taxes on its citizens to run those operations. That, in turn, necessitated tax collectors “covering our land.”

What he called “domiciliary vexation” was taxation within one’s home and property. It had begun under the previous administration, and he put a stop to it. Otherwise, it would extend until “every article of property and produce” was taxed.

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… considering the general tendency to multiply offices and dependancies, & to increase expence to the ultimate term of burthen which the citizen can bear, it behoves us to avail ourselves of every occasion which presents itself for taking off the surcharge [internal tax]; that it never may be seen here that, after leaving to labour the smallest portion of it’s earnings on which it can subsist, government shall itself consume the whole residue of what it was instituted to guard.First Annual Message, November 27, 1801

Patrick Lee’s ExplanationWise leaders keep a tight rein on government spending, for good reason!
This was the first of eight annual messages Jefferson would deliver, what we now call “State of the Union” addresses. He ended the precedent established by the two previous Presidents, who delivered their messages to Congress in person. Jefferson submitted his in writing, instead. He thought a President arriving at Congress with pomp and ceremony was too much like a King before the Parliament.

Nearly nine months into his administration, he acknowledged government’s natural tendency to increase its size, budget and reach. He was intent on reducing all three. Otherwise, our government would come to mimic those of Europe, which left its citizens just barely enough to live on and taxed away all the rest.

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His portrayals of Jefferson and [Lewis & Clark Co-Leader William] Clark are exceptional.”RiverBarge Excursions (on the Mississippi and Missouri Rivers)

… those who will be satisfied with a government of energy enough to protect persons & property sacredly, will not, I trust, be disappointed: while no effort will be spared to prevent unnecessary burthens to the labouring man.To William Bingham, July 29, 1801

Patrick Lee’s ExplanationSelf-limiting leaders free their followers from unnecessary burdens.
Bingham (1751-1804) was a very prosperous Pennsylvania businessman and Federalist poltician. As U.S. Senator, he administered the oath of office when Jefferson assumed the Vice-Presidency in 1797.

The previous post contained correspondence between them. Bingham was leaving America for a time after the death of his wife. Though a political opponent, he wished Jefferson success in his Presidency and hoped for America’s continuing prosperity.

Jefferson thanked Bingham for his kind remarks. Those who believed, as he did, that the only function of the national government was a sacred responsibility to protect its people and their property would not be disappointed in his Presidency. The government had to be strong enough to do that but no more. In limiting his administration to that goal, he pledged a very light burden on the laboring man, whose taxes would be necessary to support anything more.

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with all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens — a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.1st Inaugural Address, March 4, 1801

Patrick Lee’s ExplanationEmpowering leaders encourage citizens’ industry and protect their labor.
In recognition of Labor Day, 2015, celebrated yesterday:
Acknowledging Providential blessing on America, what more was needed? “A wise and frugal government” whose intrusion was minimal, limited to restraining people from hurting one another. Beyond that, people should be left to their own “industry and improvement.” Government “shall not take” (read: tax) the fruit of their labor.

The government’s footprint during the Washington and Adam’s administrations had extended beyond what Jefferson thought proper. So had the taxation necessary to pay for it. He sought an elimination of internal taxes and reported that accomplished in his second inaugural address four years later.

How was government to support its limited functions? By duties (taxes) on imported goods. Only those with significant disposable income could afford luxuries from Europe. That put the tax burden on the well-to-do, leaving ordinary Americans exempt from the tax collector.

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… with all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens — a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities [happiness].Thomas Jefferson’s First Inaugural Address, March 4, 1801

Patrick Lee’s ExplanationHonest leaders value and protect the labor of all laborers. In honor of Labor Day, 2013 … For 12 years, America had pursued a certain course through the administrations of Presidents Washington and Adams. In 1800, the nation chose quite a different direction.
In his inaugural address, Jefferson outlined the blessings America enjoyed and the major principles that would guide his administration. He also sought to bring a divided nation together. “We have called by different names brethren of the same principle. We are all Republicans, we are all Federalists,” he wrote earlier in this address.
Jefferson proposed a government that: 1. Was wise 2. Was fiscally conservative (frugal) 3. Restrained people from harming one another 4. Other than this restraint, left its citizens alone to improve themselves. 5. Did not tax away what people had earned by their industry.
This limited role was “the sum of good government” and necessary for its citizens to be happy.

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The remaining revenue on the consumption of foreign articles, is paid cheerfully by those who can afford to add foreign luxuries to domestic comforts, being collected on our seaboards and frontiers only, and incorporated with the transactions of our mercantile citizens, it may be the pleasure and pride of an American to ask, what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States? These contributions enable us to support the current expenses of the government…2nd Inaugural Address, March 4, 1805

Patrick Lee’s Explanation Self-limiting leaders restrict taxation to those who can afford it. The previous post detailed Jefferson’s efforts to reduce the size of government and the taxes necessary to support it. Those were internal taxes, ones imposed on everyday people and things. Those everyday people could now delight in asking, “what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States?”

On what, then, was tax imposed? On “the consumption of foreign articles,” i.e. imports.
On whom was the tax imposed? On “those who can afford to add foreign luxuries to domestic comforts,” i.e. the middle class, the wealthy, those who had money to spend on extras.
That limited taxation to edges of the country, the sea coast and the frontier. The tax was collected by merchants as they sold the goods.

He went on to write that any surplus was to be applied “to our public debts.” Once the debt was paid, he suggested that a Constitutional amendment to allow sharing federal funds with the states for the purposes of “rivers, canals, roads, arts, manufactures, education, and other great objects within each state.”

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At home, fellow citizens, you best know whether we have done well or ill. The suppression of unnecessary offices, of useless establishments and expenses, enabled us to discontinue our internal taxes. These covering our land with officers, and opening our doors to their intrusions, had already begun that process of domiciliary [home] vexation [harassment] which, once entered, is scarcely to be restrained from reaching successively every article of produce and property. Second Inaugural Address, March 4, 1805

Patrick Lee’s Explanation Careful leaders know unrestrained government will overwhelm its citizens. As President Jefferson began his second term, he reported on accomplishments of the first four years. This excerpt deals with the scope of government and the taxes necessary to support it.

He asked his fellow citizens to judge how well they’d done at reducing unnecessary government functions and expenses. Less government meant the need for fewer taxes. The end of “internal taxes,” those imposed on goods and services within the country, was proof of their success.

Note the harm Jefferson attached to growing government and rising taxes. If not checked, the time would come when “every article of produce and property” would be subject to taxation.

If not internal taxes, from where and whom would government raise its necessary revenue? That will be subject of the next post.

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But the great mass of public offices is established by law, and, therefore, by law alone can be abolished. Should the legislature think it expedient to pass this roll in review, and try all its parts by the test of public utility, they may be assured of every aid and light which executive information can yield. Considering the general tendency to multiply offices and dependencies, and to increase expense to the ultimate term of burden which the citizen can bear, it behooves us to avail ourselves of every occasion which presents itself for taking off the surcharge; that it may never be seen here that, after leaving to labor the smallest portion of its earnings on which it can subsist, government shall itself consume the residue of what it was instituted to guard.First Annual Message to Congress, Dec. 8, 1801

Patrick Lee’s Explanation
Just 12 years from its founding, Jefferson believed the national government was doing more, employing more and taxing more than the Constitution intended. In this passage, he took on the growth in government employment and the taxes required to support that growth. To summarize:
– Most offices were established by law (read: Congress) and could only be abolished in the same way.
– If Congress wanted to review the usefulness of these offices, they would have his full support.
– Since government tended to multiply and thus tax its citizens accordingly, it was necessary to look for every opportunity to decrease that tax burden.
– America must not so tax its citizens as to leave them with barely enough of their own money to scrape by, and then take the rest, too.
– Government was created to guard private property, not consume it.
Jefferson witnessed this in Europe, where government power and privilege ground the masses into helpless, hopeless poverty.
This message was what we call today the “State of the Union” address. It is required by Article II, Section 3 of the Constitution, that the Executive shall report to the Congress “from time to time.”
Presidents Washington and Adams gave their messages in person as speeches to Congress. Jefferson thought that smacked of a king addressing his subjects. He delivered his annual messages in writing, a practice that continued until President Woodrow Wilson in 1913.